Dutch finances remain healthy after fiscal row

Tim Wallace
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THE NETHERLANDS saw borrowing costs hold steady at a bond auction yesterday, despite the fall of its government on Monday, but the Italian government again saw yields rise on its debt.

The Dutch government sold €1.995bn (£1.63bn) in two- and 25-year bonds, with yields of 0.523 per cent and 2.78 per cent respectively, both almost unchanged from previous auctions despite the political turmoil.

Moody’s reinforced the country’s healthy financial outlook by maintaining its triple-A credit rating, despite the blow for the government’s row over austerity measures.

However, Italy saw bond yields jump to 3.355 per cent on €2.5bn of two-year bonds – up a full percentage point from a similar sale a month ago.

Meanwhile the German finance ministry upgraded its economic growth forecasts for next year, but French consumer confidence data continued to point to subdued household spending.

Official consumer confidence data showed slowly improving sentiment in France in April, with INSEE’s index rising one point to 88 – back to its December level, but still well below the long-term average of 100.

“It still remains a low level, reflecting persistent uncertainties about labour market evolution and household purchasing power,” said Barclays Capital’s Marion Laboure.

“It continues to reflect an anxiety which does not bode well for consumption.”

However, Germany increased its GDP growth forecast for next year from 1.6 per cent to 1.6 to 1.9 per cent, reflecting the economy’s ongoing resilience.